ADDENDUM TO LEASE AGREEMENT

<PAGE>

EXHIBIT 10.16

ADDENDUM TO LEASE AGREEMENT

BETWEEN

REED ROAD INDUSTRIAL PARK LLC #1, LANDLORD

AND

OCEAN POWER TECHNOLOGIES, INC., TENANT

1. This Addendum to Lease Agreement is executed on the 27th day of January,
2006, and specifically and expressly is incorporated into the Lease
Agreement, dated August 30, 2005. In the event of any inconsistency or
discrepancy, the terms, covenants, conditions and provisions of the within
Addendum to Lease Agreement shall supersede and prevail over those set
forth in the said Lease Agreement.

2. Landlord and Tenant acknowledge that Tenant is desirous of expanding its
existing demised premises ("Existing Premises") to include adjacent
premises consisting of 1,100 square feet of office space and 2,000 square
feet of warehouse space ("Expansion Space"). Tenant shall accept the
Expansion space in an "AS IS" condition and Landlord shall not be required
to make any changes, install any improvements or prepare the Leased
Premises in any way for occupancy in accordance with the terms of the Lease
Agreement except that Landlord shall, at its sole cost and expense, clean
the windows, bathrooms, carpeting, light fixtures, etc., replace carpeting
in front offices (ground level), repaint said offices and complete a punch
list of repair items as prepared by Tenant and approved by Landlord.

3. The Term for the Expansion Space shall commence on February 1, 2006
("Expansion Commencement Date") and shall terminate on April 30, 2013.

4. Commencing with the Expansion Commencement Date, the Annual Rental and
Additional Rental for the Expansion Space shall be as follows:

ANNUAL RENTAL

<TABLE>
<CAPTION>
SPACE PER SQUARE FOOT ANNUAL RENTAL MONTHLY RENTAL
----- --------------- ------------- --------------
<S> <C> <C> <C>
Office $15.00 $16,500.00 $1,375.00
Warehouse $ 6.75 $13,500.00 $1,125.00
---------- ---------
TOTAL $30,000.00 $2,500.00
========== =========
</TABLE>


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ADDITIONAL RENTAL

3,100 square feet presently @ $3.48 per square foot = $10,788.00
($899.00 per month)

(THIS AMOUNT IS SUBJECT TO ANNUAL INCREASES BASED UPON ACTUAL
TRIPLE NET COSTS, DEFINED IN THE LEASE AGREEMENT AS ADDITIONAL RENTAL)

TOTAL MONTHLY PAYMENT OF ANNUAL RENTAL AND ADDITIONAL RENTAL = $3,399.00

5. Upon execution of the within Second Addendum, Tenant shall pay over to
Landlord the sum of $6,798.00, which sum shall constitute additional
Security Deposit. In addition, Tenant shall pay to Landlord the sum of
$3,399.00, constituting the first month's Annual Rental and Additional
Rental for the Expansion Space.

6. All remaining terms, covenants, conditions and provisions of the said Lease
and Addenda/Schedules shall remain in full force and effect.

WITNESS/ATTEST: REED ROAD INDUSTRIAL PARK LLC #1
LANDLORD


/s/ (illegible) BY: /s/ John Lovero Jr.
------------------------------------- ------------------------------------
JOHN LOVERO, JR., MANAGING MEMBER


OCEAN POWER TECHNOLOGIES, INC,
TENANT


/s/ Mary P. Mikula BY: /s/ Charles F. Dunleavy
------------------------------------- ------------------------------------
SECRETARY CHARLES F. DUNLEAVY,
VICE PRESIDENT - FINANCE


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<PAGE>

LEASE AGREEMENT

THIS LEASE AGREEMENT is made this 30 day of August, 2005, but effective as
of May 1, 2005, between REED ROAD INDUSTRIAL PARK LLC #1, with an office at 1580
Reed Road, Pennington, New Jersey 08534 (hereinafter called "Landlord") and
OCEAN POWER TECHNOLOGIES, INC., with an office at 1590 Reed Road, Pennington,
New Jersey 08534 (hereinafter called "Tenant");

1. The Landlord hereby demises and leases to the Tenant and the Tenant
hereby hires and takes from the Landlord for the term and upon the rentals
hereinafter specified the Demised Premises, as follows:

<TABLE>
<S> <C>
SUITE 101 A: 4,028 square feet of warehouse space
3,032 square feet of office space

SUITE 102 A: 1,500 square feet of warehouse space (old NJA space)
500 square feet of office space

SUITE 103 A: 600 square feet of warehouse space (old Westbrook space)
1,400 square feet of office space
1,400 square feet of mezzanine space

SUITE 102B: 1,250 square feet of warehouse space (old Neumed space)
2,450 square feet of office space
525 square feet of mezzanine space

SUITE 103B: 3,010 square feet of warehouse space (old Aux space)
1,365 square feet of office space
300 square feet of mezzanine space
</TABLE>

in the Reed Road Industrial Park located at 1590 Reed Road ("Building"), in the
Township of Hopewell, County of Mercer, and State of New Jersey ("Schedule A"),
to be used as office, research, light assembly, warehousing and light storage
(mezzanine) ("Permitted Uses") for a Term of eight (8) years commencing
effective May 1, 2005 ("Lease Commencement Date") and ending on April 30, 2013
("Lease Termination Date").

2. A. Tenant shall pay to Landlord an Annual Rental plus Additional Rental
as set forth on Schedule B, annexed hereto and made a part hereof, which Tenant
covenants to pay to the Landlord or its duly authorized agent. At the end of
each lease year, there shall be an accounting and any necessary adjustment made
as well as an estimation of all Additional Rental


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<PAGE>

anticipated for the ensuing lease year and Tenant's monthly payment of
Additional Rental shall be adjusted accordingly. Landlord shall always furnish
Tenant with the prior lease year's total cost of Additional Rental which shall
include reasonable and customary operating expenses, including, but not limited
to, taxes, insurance, snow removal, lawn care, management fees, replacements,
repairs and maintenance. Any and all replacements shall be the financial
responsibility of Tenant and the cost of all replacements which constitute
capital improvements, shall be determined under generally accepted accounting
principles consistently applied and amortized over the useful life of said
capital improvements.

All payments of Annual Rental and Additional Rental shall be delivered to
Landlord at 1580 Reed Road, Pennington, New Jersey 08534 or to such authorized
agent as the Landlord may from time to time designate, in equal monthly
installments, on the first day of each month, during the said Term in advance.

B. Notwithstanding the foregoing, the following shall be excluded from
Additional Rental:

(i) Income, franchise, transfer, inheritance, excess profit and
capital stock taxes;

(ii) Any real estate taxes attributable to additions to the
Building if such construction does not benefit all tenants
in the Building in which the Demised Premises is located
(unless such addition yields new rentable space);

(iii) Interest, points, fees and amortization;

(iv) Depreciation;

(v) Principal payments of mortgage and other non-operating debts
of Landlord;

(vi) Costs of correcting defects in the original construction of
the Building;

(vii) Attorney's fees and other costs incurred in leasing space
and/or enforcing leases of other tenants;


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<PAGE>

(viii) Salaries and benefits and other compensation for any
executive more senior than the manager of the Building;

(ix) Financing or refinancing costs;

(x) Costs in connection with a transfer or sale of the Building;

(xi) Preparation of space for other tenants' occupancy, including
legal fees and brokerage commissions;

(xii) Lease concessions, including rental abatements and
construction allowances;

(xiii) Expenses arising out of Landlord's negligence, willful
misconduct or breach of any law;

(xiv) Costs of repairs or restoration incurred by Landlord and
covered by the amount of Landlord's insurance, as required
under the Lease, and excluding any deductible, condemnation
or third parties;

(xv) Any increase in insurance premiums to the extent that such
increase is caused or attributable to the use, occupancy or
act of another tenant and any premiums for any insurance
carried by Landlord which is not customarily carried by
other reasonably prudent landlords in comparable
office/warehouse buildings in the area in which the Building
is located;

(xvi) Ground rent or costs in consummating a ground lease;

(xvii) Organizational expenses associated with the creation and
operation of the entity which constitutes Landlord and all
general corporate overhead and general administrative
expenses not related to the operation of the Building;

(xviii)All additions to reserves including bad debts and rent
loss reserves;

(xix) The cost of any political or charitable contribution or
donation;

(xx) The cost of purchasing, installing and replacing art work in
the Building;


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<PAGE>

(xxi) All items for which Tenant or any other party compensates
Landlord such that no duplication of payment shall occur;

(xxii) Any cost or expense related to removal, cleaning,
abatement or remediation of hazardous substances or asbestos
in or about the property on which the Building is erected,
to the extent same were placed or caused to be placed there
solely by Landlord or other tenants;

(xxiii)The creation of new parking spaces for the Building.
Notwithstanding the foregoing, Landlord makes no
representation as to new, additional or relocation of
existing parking spaces for Tenant's use.

3. Landlord and Tenant hereby acknowledge and agree that Tenant previously
paid over to Landlord the total sum of $12,880.86 constituting the requisite
Security Deposit. Said Security Deposit shall continue to be held by Landlord as
security for the faithful performance by Tenant of all conditions to be
performed by Tenant under this Lease. Tenant shall, upon execution of the within
Lease, pay over to Landlord an additional sum of $27,694.02, which sum
constitutes additional Security Deposit, so that the total Security Deposit held
by Landlord shall be equal to two (2) months Annual Rental and estimated
Additional Rental ($40,574.88) as security for the faithful performance and
observance by Tenant of the terms, provisions and conditions of this Lease.
Tenant shall deliver to Landlord a Certificate of Deposit, in the aforesaid
amount of $27,694.02, which Certificate of Deposit shall be in the name of
Landlord with interest accruing thereon to the benefit of Tenant. In the event
that Tenant defaults in respect of any of the terms, provisions and conditions
of this Lease, including without limitation, the payment of Annual Rental and
Additional Rental, Landlord may use, apply or retain the whole or any part of
the Security Deposit to the extent required for the payment of any Annual
Rental, Additional Rental or any other sum as to which Tenant is in default or
for any sum which Landlord may expend or may be required to expend by reason of
Tenant's default in respect of any of the terms, covenants and conditions of
this Lease, including, without limitation, all reasonable attorneys', brokers'
and other professional fees and expenses and any damages or deficiency in
reletting the Demised Premises accrued before or after any summary proceedings


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or other re-entry by Landlord. Such sum shall be returned to the Tenant within
thirty (30) days after the expiration of the Term of this Lease provided the
Tenant has performed all of the terms, provisions and conditions required
hereunder.

4. The Landlord covenants that the Tenant, upon paying the said Rental and
performing the covenants and conditions in this Lease contained, shall and may
peaceably and quietly have, hold, and enjoy the Demised Premises for the Term
aforesaid, subject, however, to the terms and conditions set forth in the within
Lease.

5. Tenant shall not permit any Notice of Unpaid Balance or Construction
Lien to be filed against the Demised Premises by reason of work, labor, services
or materials performed or furnished to Tenant by anyone. If any such Notice or
Lien shall at any time be filed, Landlord may remove said Notice or Lien by
paying the full amount thereof without investigating the validity thereof, and
Tenant, upon demand, as Additional Rental, shall pay to Landlord the amount so
paid by Landlord in connection with the discharge of such Notice or Lien,
together with expenses incurred in connection therewith, including reasonable
attorneys' fees and costs.

6. Tenant covenants to pay the said Rental punctually without any previous
demand therefor and without any deduction or abatement. At any time during the
Term of this Lease, should the Tenant be in default of any monetary obligation
hereunder, then, and in such event, Landlord may demand from Tenant current
financial statements, by giving Tenant ten (10) days prior written notice of
such demand. Such financial statements shall be prepared in accordance with
generally accepted accounting principles.

7. This Lease is subject and subordinate to all present or future
mortgages, deeds of trust, ground leases, and other encumbrances affecting the
Demised Premises or the property of which said Demised Premises is a part. The
Tenant agrees to execute, at no expense to the Landlord, any customary
subordination and attornment agreement which may be deemed necessary or
desirable by the Landlord to further effectuate the subordination of this Lease
to any such mortgage, ground lease, deed of trust or encumbrance. In addition,
Tenant shall execute any requested estoppel certificates. The Tenant shall
execute and deliver any such instrument or instruments within ten (10) days
after Landlord's request therefor.

8. A. The Tenant shall not be permitted to assign the within Lease nor
sublet the Demised Premises, in whole or in part, nor permit or cause any lien,
including, without


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<PAGE>

limitation, any mortgage or lien or security interest arising by operation of
the Uniform Commercial Code, or encumbrance, including, without limitation, any
collateral assignment or any assignment whatsoever with respect to any
institutional or other financing, without the prior written consent of Landlord,
which consent may be withheld in Landlord's sole and absolute discretion. Any
lawful levy or sale or execution or other legal process, or any compulsory
procedure, shall be deemed an impermissible assignment within the meaning of
this Lease.

B. Notwithstanding the foregoing, Landlord shall not unreasonably
withhold, delay or condition its consent to an assignment of this Lease or
subletting of the Demised Premises, subject to compliance with all of the
conditions enumerated below:

(i) Intentionally Omitted

(ii) The operation being conducted in the Demised Premises shall
remain unaffected and any such assignee or other transferee shall use the
Demised Premises only for the Permitted Use; and

(iii) The assignment or subletting must be all of Tenant's
leasehold interests and of the entire Demised Premises, and shall in the case of
assignment also transfer to the assignee all of the Tenant's rights in, and
interest under, this Lease including the security, if any, deposited hereunder;
and

(iv) At the time of such assignment or subletting this Lease must
be in full force and effect without any breach or default thereunder on the part
of the Tenant; and

(v) The assignee or sublessee shall assume, by written recordable
instrument, in form and content satisfactory to Landlord, the due performance of
all of Tenant's obligations under this Lease, including any accrued obligations
at the time of the assignment or subletting; and


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<PAGE>

(vi) Any such assignee or sublessee shall have had substantial
and adequate business experience and such assignee or sublessee shall be
financially qualified to carry on such business in the Demised Premises; and

(vii) The proposed assignee/subtenant shall provide financial
statements setting forth its net worth, which shall demonstrate its ability to
perform all of the terms and provisions of the Lease; and

(viii) A copy of the assignment or sublease and the original
assumption agreement (both in form and content satisfactory to the Landlord)
fully executed and acknowledged by the assignee or sublessee shall be delivered
to the Landlord at least ten (10) days prior to the effective date of such
assignment or subletting; and

(ix) Such assignment or subletting shall be upon and subject to
all the provisions, terms, covenants and conditions of this Lease and the Tenant
(and any assignee/subtenant) shall continue to be and remain liable thereunder;
and

(x) Tenant shall reimburse Landlord for Landlord's attorneys'
fees for examination of and/or preparation of any documents in connection with
such assignment or subletting; and

(xi) Such assignment/subletting shall be at a rental which is
equal to or greater than the rental which Landlord is then asking for other
space within the Building. Landlord shall have the right to recapture from any
consideration paid to Tenant any surplus from any assignment or subletting in
excess of the rental Tenant is obligated to pay Landlord under this Lease; and


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(xii) Landlord shall revisit the issue of an increase in Security
Deposit and the necessity of a Guaranty(ies), which shall be determined in
Landlord's reasonable commercial discretion; and

(xiii) Any such assignment or sublease agreement shall contain an
express and specific prohibition against any additional assignment or subletting
by such assignee or subtenant; and

(xiv) No assignment or subletting shall be permitted which will
be violative of any exclusive or restrictive rights granted to any present or
future tenant, assignor or subtenant; and

(xv) If any such assignment or subletting runs to the end of the
initial Term, or to the end of any Renewal Term, then Landlord shall have the
option to recapture said space and such shall be considered to be an offer by
Tenant to Landlord to assign this Lease, as respects the proposed
assigned/sublet area to Landlord; and

(xvi) Such assignee/subtenant shall not be an affiliate of an
existing tenant of Landlord nor one with whom Landlord, or any of its
affiliates, is (or has, within the preceding nine months) negotiating with for
space; and

(xvii) Tenant's failure to strictly comply with all the
provisions and conditions of this Section, and all the subsections hereof,
shall, at Landlord's option, render any purported assignment or subletting null
and void and of no force and effect.

9. Tenant, during the Term hereof, shall keep, and at the expiration hereof
deliver up, the Demised Premises in as good order and condition as the same now
are or may hereafter be put, reasonable wear and tear and damage by unavoidable
casualty being alone excepted. If the Tenant fails to remove any property or
trade fixtures from the Demised Premises at the expiration or earlier
termination of this Lease, said property shall be deemed abandoned and Landlord
may cause the same to be removed or sold, either privately or publicly, without
notice


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to Tenant, and Landlord may retain all proceeds from any such sale without any
accounting or liability to Tenant. Tenant will not make any alterations,
additions or improvements to the Demised Premises without Landlord's prior
written consent, which consent shall not be unreasonably withheld, delayed nor
conditioned, and all alterations, additions and improvements made by either of
the parties hereto upon the Demised Premises, shall be the property of the
Landlord, excluding Tenant's trade fixtures, furniture, equipment and other
personal property, and shall remain upon and be surrendered with the Demised
Premises at the expiration or earlier termination of this Lease, excepting if
Landlord notifies Tenant that Landlord desires any and all alterations,
additions or improvements be removed by Tenant, which removal, and any and all
damages caused by such removal, shall be at Tenant's sole cost and expense.
Notwithstanding the foregoing, Tenant shall not make any non-structural
alterations, renovations, improvements or other installations in, on or to the
Demised Premises, or any part thereof, (including, without limitation, any
alterations of the signs, structural alterations, or any cutting or drilling
into any part of the Demised Premises or any securing of any fixture, apparatus
or equipment of any kind to any part of the Demised Premises) unless and until
Tenant shall have caused plans and specifications therefor to have been
prepared, at Tenant's expense, by an architect or other duly qualified person
and shall have obtained Landlord's reasonable written approval thereof, which
approval shall not be unreasonably withheld nor delayed. If such approval is
granted, Tenant shall cause the work described in such plans and specifications
to be performed, at its expense, promptly, efficiently and competently by duly
qualified or licensed persons or entities without interference with or
disruption of the operations of tenants or other occupants of the Building. All
such work shall comply with all applicable laws, codes, rules, regulations and
ordinances. In addition, Tenant may not disturb or tamper with Landlord's HVAC,
mechanical, electrical and plumbing equipment that have been installed within
the Demised Premises or Building.

10. A. The Landlord shall obtain and maintain, during the Term of this
Lease, fire insurance with full extended coverage in an amount equivalent to the
full replacement value of the insurable improvements to the Demised Premises,
including insurance coverage against damage to the building and/or its contents.
Said insurance, in any event, shall not be less than the amount of any bona fide
mortgage which may be placed on the Demised Premises by Landlord and shall be in
such form as any such bona fide mortgagee shall require with an authorized and
recognized fire insurance company authorized to do business in the State of New
Jersey.


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B. Tenant covenants and agrees that it shall carry liability
insurance, which said insurance shall be in the minimum amount of One Million
Dollars ($1,000,000.00) per accident for one (1) person, Two Million Dollars
($2,000,000.00) per accident for two (2) or more persons, and a minimum amount
of One Hundred Thousand Dollars ($100,000.00) for property damage, and Tenant
further covenants and agrees that it shall add Landlord as an additional
insured, shall furnish Landlord with a Certificate of said liability insurance
prior to taking possession of Demised Premises and shall, annually, furnish
Landlord with a copy of said Certificate, together with proof of payment. No
such policy shall be cancellable without at least thirty (30) days prior written
notice to Landlord.

C. Tenant shall not do nor permit anything in the Demised Premises or
bring or keep anything therein that shall, in any way, increase the rate of fire
insurance in the building in which the Demised Premises is located, or on the
property kept therein, or obstruct or interfere with the rights of other
tenants, or in any way injure or annoy them or those having business with them,
or conflict with the regulations of the fire department or the fire laws or with
any insurance policies upon the building in which the Demised Premises is
located, or any part thereof. Tenant shall comply with any and all laws, rules
and ordinances established by the Board of Health or other governmental agencies
or authorities. In the event there is any increase in the fire insurance
premiums as the result of the acts or omissions of the Tenant, its agents,
servants, or employees, Tenant hereby covenants to pay on demand, as Additional
Rental an amount equal to the aforesaid increase in insurance premiums.

D. All policies of liability insurance to be provided by Tenant or
Landlord pursuant to this Paragraph covering and insuring the Demised Premises,
shall expressly waive any right of subrogation on the part of the insuror
against Landlord or Tenant, as applicable, which right, to the extent not
prohibited or violative of any such policy, is hereby expressly waived by Tenant
against Landlord and waived by Landlord against Tenant. This paragraph and the
waiver of claims/subrogation has priority over any other clause of the Lease
which may be in conflict.

11. Tenant shall have the right to erect a sign on exterior of the Building
subject to Landlord's consent, and approval of Hopewell Township zoning or
ordinances; and such sign


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shall be removed at the end of Tenant's leasehold with any damaged repaired by
Tenant. Landlord shall have Tenant's corporate name printed on existing sign on
the Demised Premises.

12. If, during the Term of this Lease, the building of which the Demised
Premises is a part shall be damaged by fire or other casualty and if such damage
cannot be repaired with one hundred twenty (120) working days of the usual
working hours, the Landlord shall have the right to cancel and terminate this
Lease as of the date of the damage by giving the Tenant written notice thereof
within thirty (30) days after the date of such damage. If such notice is not
given or if the damage can be repaired within one hundred twenty (120) days,
Landlord shall restore such building with reasonable diligence, and if the
Demised Premises is rendered untenantable by such damage, the Rental shall be
proportionately abated until it is restored. In the event Landlord determines
that the damage cannot be repaired within the one hundred twenty (120) working
days set forth above, Landlord shall provide Tenant with written notice thereof.
Within thirty (30) days after Tenant's receipt of said notice from Landlord,
Tenant shall have the right to terminate the within Lease by providing written
notice to Landlord. Furthermore, in the event the damage is not substantially
repaired within the one hundred twenty (120) working days, then Tenant shall be
permitted to provide Landlord with thirty (30) days notice of Tenant's intention
to terminate the Lease. The Lease shall terminate and Tenant shall vacate the
Demised Premises at the expiration of the thirty (30) day notice period unless
prior to such date Landlord has substantially repaired any and all damage.

13. In the event that the Tenant shall remain in the Demised Premises after
the expiration of the Term of this Lease without having executed a new written
lease with the Landlord, such holding over shall not constitute a renewal or
extension of the Lease. The Landlord may, at its option, elect to treat the
Tenant as one who has not removed at the end of its Term and thereupon be
entitled to all remedies against the Tenant provided by law in that situation,
or the Landlord may elect, at its option, to construe such holding over as a
tenancy from month-to-month and subject to all the terms and conditions of this
Lease, except as to duration thereof. In the event Tenant remains in the Demised
Premises with Landlord's consent, during the first three (3) months of said
holdover period, Tenant shall pay monthly Rental, in advance, at the rate of
125% of the then existing monthly Rental effective during the last month of the
Term. In the event Tenant remains in the Demised Premises without Landlord's
consent, or if Tenant remains beyond the three (3) month period set forth above
with Landlord's consent,


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then Tenant shall pay monthly Rental in advance at the rate of 150% the then
existing monthly Rental effective during the last month of the Term. Additional
Rental shall continue to be paid as required in this Lease.

14. It is further agreed that if any installment of Rental or Additional
Rental is not paid within ten (10) days following notice by Landlord to Tenant
after such payment is due, or if Tenant shall breach any of the other terms,
covenants, provisions and conditions of this Lease, or the rules and regulations
hereinafter mentioned, the Tenant shall be in default hereof and Landlord shall
have available all remedies provided by law. Tenant hereby waives any
requirement as to notice hereunder and further waives any and all rights or
claims for redemption of any Rentals or payments or for repossession of the
Demised Premises or any portion thereof. Notwithstanding the foregoing, Landlord
shall provide Tenant with written notice of any non-monetary default and Tenant
shall have thirty (30) days within which to cure said default and such
additional time as may be reasonably necessary providing Tenant is promptly,
continuously and diligently pursuing a cure.

15. Landlord, its agents or employees, may enter to clean, examine and
exhibit the Demised Premises and may make repairs and improvements therein and
in and to any portion of the building in which the Demised Premises is located,
and for such purpose shall have the right to install pipes and wires and
otherwise utilize the Demised Premises, including the right to break floors,
walls and ceilings, and to move cases, fixtures and floor coverings when
desirable for such purposes, but same